Word: redisco
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Dates: during 1960-1969
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Some companies try to get out of trouble by diversifying into new fields, but American Motors Corp. has traveled the opposite route. Last year the debt-ridden automaker sold off its profitable credit subsidiary, Redisco Inc., to rival Chrysler Corp. That left the appliance-making Kelvinator division as A.M.C.'s only major operation outside of the automobile business-and A.M.C. ever since has been seeking a buyer for Kelvinator...
...raise a quick $30 million in cash, A.M.C. sold its healthy Redisco, Inc. subsidiary to Chrysler Corp. A credit operation, which does a $250 million annual business financing sales of furniture, TV sets and other items, Redisco had earned a robust $2,500,000 a year. A.M.C.'s appliance-making Kelvinator division is also profitable-and for sale. Drastic as such surgery is, Chapin and Co. see little alternative to sacrificing A.M.C.'s two strong, non-automaking arms...
...Redisco proceeds, $25 million will go directly to a group of 24 banks. Headed by Chase Manhattan, the group last year loaned A.M.C. $75 million, then turned up another $20 million after Chapin became chairman in January. Last week, faced with a May 31 due date on the loan, Chapin persuaded the bankers to extend the credit line until year's end. As security, the banks hold a first mortgage on all of A.M.C.'s property...
Second Collision. The loan extension will give A.M.C.'s new Javelin specialty car room to go into production this fall. Still, some auto-industry financial men fear that Chapin and his colleagues are only painting themselves into a corner. Should Kelvinator go the way of Redisco, A.M.C. may well lose a chance at a Studebaker-style recovery. After losing $25 million on its auto operations, Studebaker shut down its South Bend, Ind., plants in 1963, has since come back as a profitable maker of appliances, electric generators and other products. Wall Street has been full of speculation about possible...
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